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"Samarco will temporarily shut down two older iron ore pellet plants from the end of November 2008 to mid-January 2009, at which time the situation in the markets will be reassessed," BHP said in a statement. "The third iron ore pellet plant that was commissioned in April 2008 will remain operating."
Until now, BHP had said that it wouldn't cut iron ore production despite cuts in output by its major rivals. Although Samarco is a joint venture and therefore not fully controlled by BHP, the decision to reduce output could be an indication that BHP will cut iron ore production at its wholly owned mines.
Samarco's total iron ore pellet production will fall to 7.6 million metric tons each year from a total capacity of 21.6 million metric tons.
BHP Billiton Chief Executive of Ferrous and Coal, Marcus Randolph, said the global market conditions are challenging for the steel industry and its raw materials providers.
"There is no doubt that these are very challenging times across the whole industry, and there is substantial uncertainty around the short term outlook," he said.
"While the adjustment at Samarco was entirely the decision of the joint venture's independent management team, BHP Billiton believes this is a sensible decision in the current climate," Randolph said. "We will continue to monitor the situation and Samarco is also working closely with its customers through this period."
Samarco is a 50-50 joint venture of Companhia Vale do Rio Doce (RIO) and BHP Billiton.
-By Iain McDonald, Dow Jones Newswires; 61-2-8235-2953; iain.mcdonald@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=zm0xWS6AtT9mESXOjsMoCg%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
11-23-08 0248ET
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